IPART review of social housing rents, etc

As part of the Future Directions for Social Housing strategy, former NSW Premier Mike Baird tasked the Independent Pricing and Regulatory Tribunal (IPART) with a review of social and affordable housing rent models. Earlier in the week IPART released its draft report, along with a number of draft recommendations and a call for further comments by early May 2017.

Now, it's important to keep in mind that this is merely a draft of the report, and even when finalised it will simply be making recommendations to Government... and who knows how all that will eventually play out? But there are four significant proposals in there that are likely to shape the development of social housing policy and practice in New South Wales.

1. Income related rents are the go, but tenants should pay more
First, there's the recommendation that social housing rents should continue to be calculated as a percentage of a tenant's income, rather than set against market rents or calculated in some other way. IPART found that housing affordability is declining across the board, as both house prices and private market rents are rising faster than incomes. In order to ensure affordability is protected within social housing it recommends its rents stay linked to tenants' incomes.

From IPART's draft report, page 14

IPART found no strong link between income-related rents and work disincentives for tenants, noting that a range of other factors contribute to tenants' abilities and incentives to take on paid work. It recommends continuing to set rents based on a 25%-30% scale, so that tenants on higher incomes pay proportionally more of their income as rent. This may also mean retaining the problem of higher effective marginal tax rates for income earners in social housing, as the scale does not increase progressively. Rather than a higher income earner's rent being based on 25% on the first chunk of their income, sliding up to 30% as each threshold is passed until reaching the market cap, the proportion is simply adjusted to reflect the rate payable at the relevant level of income. IPART hasn't specifically weighed in on this issue, and its modelling suggests members haven't turned their minds to it, but this is where any real work disincentive is currently built into social housing rents. It's not the most significant work disincentive for social housing tenants, though, and IPART's draft report does have a bit to say on policies around tenants' eligibility and renewal of tenancies with this in mind. We'll come to that in a moment.

Still on rents, though, and the draft report recommends some types of income that are currently excluded from rent calculations, or are calculated at a lower rate, should be included and/or brought up to the 25%-30% rate. This would bring a larger proportion of a tenant's Family Tax Benefit payments into their rent calculations, as well as previously untapped income such as the Pension Supplement. For some tenants rents would go up by around $8-$12 per week - netting social housing landlords an estimated $40million p.a. - and the draft report recommends limiting these increases to no more than $10 per week in any given year.

2. Back to the future on eligibility and reviewable fixed-term tenancies
The second significant thing is a draft recommendation to stop using fixed term tenancy agreements for social housing tenancies - that is, we should go back to using "continuous leases" and periodically review tenants' needs rather than their eligibility for assistance. The use of fixed term tenancy agreements that trigger reviews of tenants' eligibility is where the real work disincentive exist within our social housing system, as tenants who move into a higher income bracket are not only faced with increasing rents and higher effective marginal tax rates, they could actually lose their home if they earn too much.

IPART's draft recommendation includes "continuous leases to be reviewed at least every three years to assess whether the dwelling continues to be suitable for the tenant's needs and characteristics". While this leaves some wriggle room as to what exactly would happen if a review came back suggesting that a dwelling is no longer suited to a particular tenants needs, other parts of IPARTs report suggest this would result in relocation rather than eviction. Certainly an increase in a tenant's income would no longer be a factor, as the draft report suggests tenants who earn too much, and do not want to move into the private rental market - even with one-off assistance and a limited right of return - should pay an additional 5% above market rent for the privilege of a tenancy that offers greater security of tenure than can be achieved in the private rental market.

This is an interesting but unwelcome proposition. It plays into similar conversations happening in other parts of the rental housing sector advancing the idea of charging tenants a premium for a more secure tenancy. Of course we'd rather see tenancies made more secure across the board, by making some changes to our renting laws to remove landlords' rights to evict tenants without grounds - and we certainly think that would go much further as an incentive for working tenants to move out of the social housing system. But on this, the notion that social housing tenancies are more secure than the private rental market is a nice idea, but is probably not as true as we'd like it to be. There's a definite trend towards social housing landlords using no-grounds notices of termination when all else is deemed likely to fail. Curiously, IPART's draft report has made no reference to the Residential Tenancies Act in its recommendations or deliberations concerning the transition from fixed terms to continuous leases.

3. Choice based letting
Third on our list is the elusive notion of "matching households to the best housing for their needs", which is code for sorting out this apparent problem of "under-occupancy" within the social housing portfolio. Currently this is addressed through measures such as the vacant bedroom charge, which is applied to any tenant who declines to move to a smaller dwelling when asked to, and limiting additional occupants' rights to be recognised as a tenant if the original tenant goes to prison, or into rehab, or passes on.

IPART's draft report recommends a new approach - making it clear that eligibility for social housing is not tied to any particular dwelling, but to "a dwelling that meets their household's needs". Thus, social housing tenants whose household complements and needs change over time would expect to be moved around to make sure the portfolio can be put to maximum, efficient use. This would be coupled with a choice-based letting system as a way of softening the blow.

Choice based letting has been used in a couple of other places - IPART refers to a Canadian experiment but also notes it has been widely used in parts of Europe - but our experience of it in New South Wales is limited to relocations from Millers Point, Dawes Point and The Rocks. In those instances, some tenants referred to it as the "housing lottery" indicating that it can indeed be seen as something other than an exercise in agency and choice, particularly for those who apply for available properties and miss out.

Nevertheless, IPART's draft report provides quite a bit of detail about how a choice based letting system might work, and we'll spend some time looking over it. Significantly, it suggests tenants awaiting a transfer should be given priority over people on the waiting list, which would be a fair departure from the status quo. Presumably that would apply to tenants who have initiated a transfer as much as those who have been approached to relocate, provided the tenant's "eligibility" review has determined that their housing needs have changed, but this has not been made clear.

What's also not clear is how tenants who have been approached to relocate but decline to participate in the choice based letting scheme would be treated. Here again IPART has made no reference to the Residential Tenancies Act and gives us no indication of how tenancies will end - whether in the case of a tenant who doesn't comply with a request to move, or one who does.

4. Social housing isn't going to pay for itself
Last but not least is IPART's draft recommendation that the New South Wales Government implement a sustainable funding model for social housing providers, noting a current shortfall of close to $1billion. The draft suggests this should be paid to housing providers as an explicit subsidy, rather than an implicit subsidy as is currently the case. This is incredibly significant in the context of a national discussion in which the value of the National Affordable Housing Agreement is being called into question.

From IPART's draft report, page 34

The draft report also calls for the development and publication of a Social Housing Strategy, to be updated annually, outlining how, where and why new dwellings are to be added to the portfolio. It makes a further push for the management of social housing to be handled by community housing landlords, suggesting the role for government is to oversee construction of dwellings and set the policies under which social housing should be managed.

Interestingly, IPART's draft report suggests that the New South Wales Government should steer away from affordable housing programs, focusing on using its available resources to assist those with the greatest need instead. Given discussions at the national level around the development of an Affordable Housing Bond Aggregator, and the potential for Inclusionary Zoning policies to be introduced through a range of planning reforms, it may soon be possible for community housing landlords to pursue growth of their affordable housing portfolios without the direct involvement of a NSW State Government program. In any case, we're inclined to agree that if faced with a choice between growing affordable housing or social housing portfolios, it's social housing that should get the nod.

***

IPART is calling for written responses to its draft report by 12 May 2017. They will hold a public hearing in Dubbo on 2 May 2017, and another in Sydney on 9 May 2017. For more information and details on how to contribute your own feedback, visit their website at this link here.

New Ministers

New NSW Premier Gladys Berejiklian has announced her first Cabinet and front bench.

The Tenants' Union congratulates our new Minister for Innovation and Better Regulation (covering Fair Trading NSW as part of the portfolio), the Hon. Matt Kean MP.

Member for Hornsby and
Minister for Innovation and Better Regulation,
the Hon. Matt Kean MP

Kean was elected to the Legislative Assembly in 2011, as the Member for Hornsby. He served as a Parliamentary Secretary for Community Services in 2014-15, and more recently for Treasury in 2015-17, but this marks his first Ministerial position. According to the Register of Disclosures by Members of the Legislative Assembly, Kean is a tenant, and his appointment comes as the NSW Government prepares to introduce legislation to amend the Residential Tenancies Act 2010 following the statutory review of the Act. We understand drafting is well underway so we don't expect this Ministerial reshuffle to have too great an impact on the reform process - especially since Kean's predecessor, the Hon Victor Dominello MP, will take on the more senior Finance, Services and Property portfolio under which Innovation and Better Regulation sits.

(On that note, we offer our congratulations and thanks to Minister Dominello as well. Dominello held the Innovation and Better Regulation portfolio since April 2015, making him one of the longest serving Ministers for Fair Trading in recent history. During his time in the portfolio he introduced Rental Bonds Online, which allows tenants to deposit their money with the Rental Bond Board directly before entering into a residential tenancy agreement. He presided over the review of the state's renting laws, and while this will not deliver stability, liveability and affordability for tenants Dominello did commit his Government to improving the law for survivors of domestic violence who need to end a tenancy. He'll no longer take carriage of this reform, and it remains to be seen just how it will be implemented, but we acknowledge his consultative approach to its development, and his dedication to seeing it through. Finally, Dominello also oversaw the drafting and implementation of the state's new strata laws. While these laws are not without controversy, they've taken a useful step towards better representation for tenants in the operation and management of strata schemes in New South Wales.)

The Tenants' Union also welcomes the return of Pru Goward to the Family and Community Services portfolio. Goward resumes this portfolio along with Social Housing, while retaining her appointment as Minister for the Prevention of Domestic Violence and Sexual Assault.

Member for Goulburn and
Minister for Family and Community Services
Minister for Social Housing, and
Minister for the Prevention of Domestic Violence and Sexual Assault,
the Hon Pru Goward MP

When Goward previously held the Family and Community Services portfolio there was no Minster for Housing, with responsibility for Social Housing split between Family and Community Services and Finance and Services. This didn't work so well, and a discrete Social Housing portfolio has since been created. It sits alongside the Family and Community Services portfolio, reflecting the Government's view that a Social Housing tenancy is a form of welfare dependency.

Since Goward last held the Family and Community Services portfolio, with shared responsibility for Social Housing, the Government has launched its Future Directions for Social Housing strategy. As a ten-year strategy, there is still much to be done in developing and implementing many of its key proposals, and Goward will now take charge of these. Most notably, she will preside over discussions arising from the current IPART Review of Social and Affordable Housing Rent Models. She will also oversee the Government's efforts to grow the social and affordable housing portfolios for the first time in many years.

Finally, the Tenants' Union congratulates Anthony Roberts - himself a former Minister for Fair Trading - on his appointment as Minister for Planning, Minister for Housing, and Special Minister of State.

Member for Lane Cove, and
Minister for Planning,
Minister for Housing and
Special Minister of State,
the Hon. Anthony Roberts MP

The inclusion of a Housing Ministry is not new, but it hasn't been done since Frank Terenzini held the portfolio in Kristina Keneally's administration, circa 2010-11. Back then, a Housing Minister was really just a Social Housing Minister with a shortened title, so what is new is the inclusion of both a Housing portfolio, with links to the Planning portfolio, and a Social Housing portfolio tied to Family and Community Services. No doubt this broadened focus reflects Berejiklian's much publicised ambition "to make sure that every average, hard-working person in this state can aspire to own their own home", and it bodes relatively well for housing policy discussion during Berejiklian's time as Premier. Of course, we mustn't forget that now former Planning Minister for Rob Stokes once took a swipe at negative gearing and capital gains tax discounts for their contributions to housing unaffordability. His departure from these policy discussions doesn't bode quite so well...

Welcome to 2017 - the year of the renter

Welcome back to the Brown Couch for 2017. It's been a swell (at times sweltering) break - now it's time to dust off the old keyboard and get ready for another big year.

Domain's Jennifer Duke has dubbed it "the year of the renter" on account of the rising population of Australians who are long-term tenants, tipped to outnumber home-owners in parts of the country during 2017. Duke opines that "... if the growing group of tenants are to be housed with security and decency, fixing the rules that surround the rental market is something that has to be done now." We couldn't agree more.

While we're firmly in the "every year is the year of the renter" camp, we must admit there's a growing interest in tenants' rights across the country. The perennial housing affordability conversation is slowly starting to explore the costs and conditions of long-term living in the private rental market. Of course, there's still a long way to go, but there's a noticeable change in the air. For one thing, our own engagement with the mainstream media has never been higher, and we're getting a far more sympathetic ear than we might have expected even just a year or two ago... For example, check out our spot on ABC News 24's Weekend Breakfast program from late last year:

There's a long way to go, but there will be a couple of big opportunities to push the discussion further as we move through this current year of the renter. For one, we'll have a new Premier who has listed housing affordability as a key priority area, and while we don't yet know what this means for the Social Housing and Fair Trading Ministerial portfolios, we'll have to take it as a positive sign as the Government considers the final stages of the statutory review of renting laws, and pursues its ambition for Social Housing reform. Fingers and toes crossed, just for good measure.

We can expect some of the 2016 Census data to start coming through towards the middle of Autumn, which will tell us just how much our renter population has grown over the last five years. And we're expecting a report from a national survey of tenants that was conducted late last year by Choice, National Shelter and the National Association of Tenancy Organisations, so watch this space. In the meantime the next issue of Rent Tracker is just around the corner, and we'll have more to say about the impact of Airbnb on the Sydney rental market in the coming weeks.

2017 is set to be another big year, full of opportunities to join the push for a better deal for tenants. Keep an eye out for us, and jump in where you can.

Who is the social housing landlord in this brave new world?

There has been some understandable confusion about the role of community housing providers after FACS Housing transfers large sections of its public housing stock over to them.

So, what will be the various roles of these parties in this brave new world:

• NSW Land and Housing Corporation (LAHC)
• FACS Housing NSW
• community housing landlord
• community housing tenant

Here’s what the webpages of LAHC and FACS NSW say:

• LAHC and FACS work together to achieve a unified administration of the Act
• LAHC owns and manages land, buildings and other assets within the social housing portfolio'
• Housing NSW, an agency of the NSW Department of Family and Community Services (FACS) is one of the largest providers of social housing in the world
• Housing NSW directly manages approximately 122,000 properties Housing NSW provides more than 19,000 properties through community housing providers.

The Social Housing Minister's media release talks of:

Delivering better outcomes for tenants and the community is the focus of reform which will see social housing in four areas of NSW managed by Community Housing Providers (CHPs). 

Minister for Social Housing Brad Hazzard said Family and Community Services (FACS) would transfer, on a long leasehold basis, management of approximately 18,000 properties to the community sector to ensure a better experience for tenants in social housing.

On 11 October 2016 the NSW Government introduced the Housing Legislation Amendment Bill 2016 and this was assented to on 25 October 2016. This Act amends the Housing Act 2001 with respect to the entry of concurrent leases. There is a new Section 13A:

13A (Entering into concurrent leases)  ...
(2) On entering into a concurrent lease under this section:  ... (b) the tenant is no longer renting public housing.

Discussion of 'concurrent leases' on The Brown Couch here provides some clarification:

A concurrent lease allows those property rights and interests that have not been passed on to, say, a residential tenant, to be transferred to a third party. Lawyers would think of it as a division of the "bundle of rights" that are attached to property, in a way that retains a clear hierarchy of interests and concerns - property owner > concurrent lessee/landlord > residential tenant/occupier. Rights that are tied to a residential tenancy agreement are not affected by a concurrent lease, and this is what the Minister is getting at when he suggests "tenants' lease length and lease conditions will remain the same". 

Strictly speaking, the Land & Housing Corporation (the Public Housing landlord) has been setting up concurrent leases all over the place, as it has already transferred the management of around 28,000 Public Housing properties to Community Housing landlords since about 2008. But it's not been done in such a clear-cut way before. In the past, tenants have been asked to rip up their residential tenancy agreements with the Land & Housing Corporation, and enter into a new one - perhaps with new, less favourable terms - with the Community Housing landlord. 

Concurrent leases may take some of the sting out of the coming property transfer scheme...

One view is that concurrent leases may be the most sensible way of doing tenanted transfers, given Australian social housing transfer practice has never given tenants a role in determining whether a transfer happens, nor a genuine choice as to who the new landlord will be. They avoid unnecessary confusion (about so-called ‘choice’) and give assurance (that is, that the current tenancy agreement remains on foot). South Australia used concurrent leases in its recent transfers and it appears to have made the process easier for those reasons.

However, it appears LAHC wishes to be no longer be responsible for repairs and maintenance. An 'Industry Sounding' document that was circulated and discussed amongst FACS officials and community housing landlords in early October states that the community housing provider will be responsible for maintenance, while LAHC will retain responsibility for 'structural repairs and strategic portfolio management decisions'.

But if this is a 'leasehold' arrangement, then isn't there still a landlord and tenant relationship between LAHC and the community housing provider? And, because of the broad nature of the definition of a ‘residential tenancy agreement’, wouldn't the LAHC still be responsible for repairs and maintenance under the Residential Tenancies Act 2010? We expect the answer is 'No’, because a ‘concurrent lease’ between LAHC and a community housing landlord may be exempted from the Act’s coverage. See section 156 (1) of the Residential Tenancies Act 2010:

156 Head leases involving social housing providers
(1) A residential tenancy agreement is exempted from the operation of this Act if:
(a) under the agreement, the landlord is a social housing provider (the head landlord) who lets the premises to a tenant who is a social housing provider, and
(b) the agreement is in writing and the agreement states that this section applies to the agreement.

Accordingly, the landlord and tenant relationship between LAHC and the social housing provider can be exempt from the Residential Tenancies Act 2010 by the simple insertion of a clause in their concurrent lease documents. This means that such a landlord and tenant relationship will be covered under the provisions of the Landlord and Tenant Act 1899 until such time as this last Act is repealed (slated for June 2010 (s 1D)), or common law. The specific terms of any concurrent lease will determine who takes responsibility for what. But such details may be considered 'commercial in confidence'. This prompts us to ask, will there be a level of transparency around all of this? We will have to wait and see.

So, coming back to our earlier question about the various roles of the parties ... there will be two landlord and tenant relationships:

Landlord (head-landlord):    NSW Land and Housing Corporation (LAHC)
Tenant:                                  community housing provider

Landlord (head-tenant):       community housing provider
Tenant (sub-tenant):             community housing tenant

For all practical purposes, the landlord will be the community housing provider and the tenant will be the social housing tenant who has signed a social housing tenancy agreement over the premises. The community housing provider is not like a real estate agent who just manages the premises. They will have all the responsibilities of a landlord under the Residential Tenancies Act 2010.

The Australian Dream

The following is taken from Dr Robert Mowbray's remarks when launching Professor Alan Morris’s book on Tuesday, 25th October 2016. Robert is the Project Officer, Older Tenants with the Tenants’ Union of NSW.

Professor Alan Morris with his new book - The Australian Dream

It’s good social research ...
In Alan Morris’s Preface he quotes Professor George Ritzer (Explorations in the Sociology of Consumption: Fast Foods, Credit Cards and Casinos, 2001) who said (and I paraphrase):

There is a great need for sociologists to do work that can be read by a more general audience. Sociology should be interesting and relevant ... and should inform public dialogues on a wide range of important issues.

This quote reminded me of what two prominent Australian sociologists, Colin Bell and Sol Encel (Inside the Whale, 1978) said nearly forty years ago:

Social research should be linked with the public issues of the wider world. It cannot be value-neutral. Good social research reflects social and political concerns first and techniques later, if at all.

Alan’s book is, firstly, very readable because it lets those struggling in the housing market tell their own stories ... and secondly, it meets Bell and Encel’s criterion of ‘good social research’ because it reflects social and political concerns foremost.

Recent publicity about older renters ...
Over the last month the plight of older renters has been highlighted in both newspaper and magazines. Some examples:

27 October 2016: Peter Martin writes 'We are condemning more and more Australians to retirements burdened by rent'. He continues: ‘One of the barely stated reasons why house prices have been climbing out of reach of new buyers is many of us have been becoming richer. Would-be investors poured into the market. One in every six taxpayers became a landlord. To get there and stay there they've had to outbid would-be residents.'

10,11 October 2016: Kirsten Robb writes 'Life-long renters face financial stress in retirement'... according to a paper released on Monday by Swinburne University, which found more Australians are renting in retirement and facing financial stress. The authors of this report, Dr Andrea Sharam and others, found: 'The proportion of aged persons in Australia is set to increase significantly, posing many challenges. Amongst these is the growing number of households who lack housing security in retirement. ... A very marked outcome is that to be a private renter at 45 years of age is likely to mean being a renter and highly impoverished, in retirement.’ 

4 October 2016: A great essay by Anwen Crawford who writes about 'Nowhere to go – older women and housing vulnerability': 'The number of older women who are rental tenants in Australia is growing, and these women ... are increasingly vulnerable to poverty and homelessness ... Housing affordability and security for rental tenants will only become a more pressing issue as Australia’s population continues to age.'

4 October 2016: An excellent article by Kim Arlington, entitled 'Over-55s are the forgotten homeless': In this article Ms Yeoman, Chief Executive of Mission Australia said: 'older women can face a housing crisis for the first time in later life ... previously they may have had a stable housing history but even small changes in their financial circumstances – a rise in rent or utility bills or unexpected health costs – could propel them into homelessness.'

So Alan Morris’s book is well timed ...
Quote from Elsie, private market tenant:

‘... I think when people get to 65 and they’re on a Centrelink pension and in private rental, they should be entitled to take their life if they wish ...’

Quote from Rhonda, private market tenant:

‘I hate it because you’re more or less at someone else’s mercy all the time.’

Quote from Dan, public housing tenant:

‘When you know your accommodation is right, this is especially when you’re older, you can pursue other interests. You’re more relaxed ... you’re in for a longer life.’

Quote from Marlene, home owner:

‘It [home ownership] just gives you security ... It gives you freedom of expression ... Your home is an extension of your personality.'

Alan documents how, over the last two decades, the private rental sector across Australia has once more become substantial. It presently accommodates about one in four households. A major shift is that, for many households, renting in this sector is no longer a transitional stage. And the proportion of the population aged 65 years and older, like all developed economies, has increased significantly and is continuing to do so. Many will be become trapped in the private rental sector. Indeed, for a number of reasons, many will ‘fall out’ of home-ownership. Alan’s premise is that the capacities of Australians who are dependent primarily or solely on the Age Pension for their income are shaped fundamentally by their housing tenure. He places the 'meat on the bones', with real people telling their stories.

Alan conducted 125 interviews and highlights that many of the older private renters in his study were battling to purchase everyday necessities. They fare very poorly and, indeed, they are the new face of poverty in this country.

Alan’s book is divided into chapters that, by tenure, examine the cost and standard of accommodation, consumption and living a decent life, social ties, leisure, health including dental care and pharmacist costs ... and so on.

Alan found that, for older private market renters, the cost of their accommodation and negligible security of occupancy were primary concerns ... and this fundamentally shaped their everyday lives and dispositions. For most of the private renters, the cost of their housing was a considerable burden and provoked a great deal of stress. Indeed, this contrasts to almost all of the social housing tenants who felt that their rent was reasonable and manageable and that it left them enough disposable income to live a decent, albeit frugal life. But many of the older private market renters were in a dire situation due to the high cost of their accommodation. Many were having to use more than half of their income to pay for their accommodation. The high cost of their accommodation restricted their consumption and made it difficult for them to lead a decent life. Alan concludes that extreme frugality and self-deprivation were central features of many older private market renters’ lives.

He found that many private market renters were not able to buy fruit, fish and meat regularly and were dependent on unhealthy processed food. Also, any unexpected expense was a major blow and precipitator of anxiety. And, so medical expenses were seen as a serious burden by a substantial proportion of older private market renters and it was evident that there was a tendency to avoid health services.

Alan found that mental health was a major issue, with most of the private market renters reporting that they lived in fear of being asked to vacate or being subject to an untenable rent increase. There is a constant fear and much trepidation. As a consequence, everyday life is often enormously stressful. He says minimal security of occupancy, financial stress, inadequate accommodation and inappropriate neighbourhoods contributed to many of the older private renters being plagued by these high levels of stress. This contrast to homeowners and social housing tenants.

It’s the same story on all accounts. Home owners and public housing tenants on the Age Pension fair well, but private rental market tenants on the Age Pension struggle. (The noticeable exception here is public housing tenants in Millers Point, Sydney, who are being forced to relocate.) Except for those who receive support from family members, older private renters are very much an abandoned lot!

A digression ...
Here I would like to reflect on one of the three key pillars of the NSW Government’s ‘Future Directions in Social Housing in NSW’ strategy. It talks of ‘providing more opportunities, support and incentives to household to avoid and/or leave social housing.’ It talks of a system where, in the future, 'housing assistance is seen as a pathway to independence' and, to do this, placing increased reliance on private rental assistance.

This is placing an enormous degree of faith in the private rental market. But hold on!

Firstly, from The Sun-Herald (23 October 2016) comes the story of Ankita who is forced to show savings of a year's rent in advance before her application for a tenancy is even considered. Those interviewed by Alan provide graphic accounts of the type of accommodation they have been forced to rely upon in the private rental sector … and this is the private rental market on which Future Directions relies as an alternative to expanding social housing.

Secondly, Family and Community Services’ website states that Future Directions is backed by the whole of Government – including Health, Education, Justice, Planning and Environment, Industry ... but there is no mention Fair Trading! Indeed, Fair Trading has been reviewing the very legislation that can provide all tenants with greater security of tenure, for example, by repealing ’no-grounds’ eviction provisions. The omission of a reference to Fair Trading on this website page suggests that one arm of government was not speaking to another arm of government when Future Directions was being formulated!

Further, the Federal government is a key player here. Private renting will only be a reasonable long term option when our taxation regime discourages speculation in housing by ‘mum-and-dad’ investors and encourages institutional investors. Such a change is loudly rejected by the Federal Government. Discouraging speculation is picked up in a recent editorial in The Sydney Morning Herald (25 October 2016) which reads:

Mr Morrison says the objective of his approach "is to have policies that mitigate the artificial inflation of asset prices". That artificial inflation derives from negative gearing and the CGT discount.

And again, in recent days, Lucy Turnbull, Chief Commissioner of the Greater Sydney Commission, said greater institutional investment in housing, alongside stronger legal protections for tenants, could help to make renting a more attractive option.

Alan Morris’s book is an indictment of our political masters’ failure to acknowledge the changes necessary to make private renting a more attractive option ... along with years of neglect of public housing.

Alan Morris’ skills assist public housing tenants ...
And, of course, after Alan forwarded his manuscript to the publisher, he used the same skills in pulling together Shelter NSW’s Brief entitled ‘A contemporary forced urban removal: The displacement of public housing residents from Millers Point, Dawes Point and the Sirius Building by the New South Wales Government’. The power of this document is that, again, the residents tell the story.

Let’s launch Alan Morris’s book ...
Firstly, let me acquaint you with two little known facts about Alan. He is a serial letter writer to The Sydney Morning Herald, with another letter on 25 October 2016, the day of his book launch, where he writes: ‘Social housing as a viable option for low-income households needs to be revived’.

Also, he is a veteran of forced urban removal, having worked alongside of the victims of such in Apartheid South Africa. Back in 1986 The New York Times described Alan as ‘a white activist from the Transvaal Rural Action Committee, a group that monitors forced removals.’

Alan Morris’s book is more than a contribution to the current housing debate:

• It is an affirmation that past government housing policies regarding home ownership and public housing have led to satisfied outcomes for older persons on low incomes. 
• It is a warning ... indeed a dire warning ... to present and future governments that a weakening of security of tenure in social housing (including any re-run of what has occurred in Millers Point over the last two and a half years) and a reliance on the private rental sector as it is currently constituted will led to immense hardship for older persons on low incomes in future years.

Congratulations to Alan Morris for such an easy to read and compelling publication and a big thank-you to the 125 people who shared their experiences with all of us.

You may read a review of Alan Morris’s book in the Huffington Post on 5 October 2016 and some media around the book launch here.

Bonds for public housing? Credit where it's due...

We recently grumbled about the lack of consultation leading up to the proposed introduction of bonds for public housing tenancies.

Since then, FACS Housing has expanded the handful of non-government housing peaks it has asked to comment on a draft operational framework, and the Minister for Social Housing himself has invited several of us to meet with him to discuss our concerns.

It's entirely possible that none of this would have happened if not for our grumble, but it's likely the grumbling of others has had a fair bit of impact, too. We know we're not the only ones put out by the proposal, and we're not the only ones who've said as much.

This is an indication that the NSW Government is prepared to stop and listen when it aims wide of the mark on policy, and we've got to give them credit for that. But even so, the Minister has confirmed his commitment to bonds for public housing tenancies.

Numerous advocacy groups have implored him to reconsider, and this includes the TU. Our comments on the draft policy and operational framework can be found here.

Building policy that resonates

A couple of weeks ago we mentioned the looming possibility of a rental bonds scheme for new public housing tenancies. We now know that FACS Housing have been feverishly working away on this, putting in a great deal of time and energy to build the policy's operational framework.

You see, the Social Housing Minister's office decided to go with a rental bonds scheme somewhere after the 2015 NSW State election, and although this was never formally announced they stuck a quick mention of it in the 2016 document Future Directions for Social Housing. Thus, the policy was born.

But here's the problem: the Future Directions strategy is a reflection of a 2014 discussion paper concerning Social Housing in NSW that was subject to very broad consultation. It was initiated by Gabrielle Upton when she was the Minister for Housing. The discussion paper asked no questions about rental bonds for public housing tenancies, so of course none of the participants raised any issues or concerns about such a scheme. This is significant, because the idea had been raised before - way back in 2012, when Greg Pearce was the responsible Minister.

It was not until late April 2015 - some 3 months after the close of the Upton-lead discussion paper's consultation period (a period during which New South Wales not only went to the polls but also saw a Cabinet reshuffle that brought in a new Social Housing Minister) - that the idea of bonds for public housing tenancies came up again. This was in a Daily Telegraph "exclusive". Now, that can hardly be seen as an invitation to comment, if indeed it was intended as a serious policy announcement.

Then the initiative was slipped into the Future Directions document and became part of the ten-year Social Housing strategy, that was supposed to have been informed by the 2014 discussion paper.

The upshot of all of this is that FACS Housing have embarked upon a significant shift in policy that will have implications for their own work, the lives and livelihoods of their future tenants, and the State of NSW's budget (yes, this is likely to come at a cost to Government). They have taken this bold step without asking anyone these two simple questions: is this a good idea? ... and ... how would it work alongside our existing tenancy management and debt recovery frameworks?

The answers to such questions could surprise them, and perhaps that's why they've not been asked. Then again, perhaps they're just taking their lead from the tabloids and the shock-jocks rather than the people this policy would affect. It wouldn't be the first time a Government and its agencies did that.

For our part, we can see a couple of significant problems meandering along behind this proposed scheme. Notwithstanding our principled objection to the idea in the first place - rental bonds are about cash-flow for small time landlords with mortgages to worry about, not public housing departments with budgets in the hundreds-of-millions - there is a great deal of work to be done to ensure the public housing landlord's approach to tenant liabilities and debt recovery processes is properly suited to a rental bonds scheme.

Built on incorrect assumptions, this scheme could well go the way of the Tacoma Narrows Bridge.

Bonds for public housing?

The notion of rental bonds for public housing tenancies has been floating around for years. Government Ministers who take responsibility for the Land & Housing Corporation - the legal entity that actually owns all the public housing in New South Wales - are forever looking into the idea of taking and holding large sums of tenants' money, to retain in the event of a cleaning or repairs bill at the end of a tenancy, to see whether it would give them access to money that they can't otherwise recover from tenants of limited means. Usually, they conclude the cost of running such a scheme would outweigh any benefit it could produce for the Government landlord.

Public housing tenants are already liable for the negligent or intentional damage they cause during their tenancy, just like every other tenant in New South Wales. But, unlike every other tenant in New South Wales, they are also legally required to enter into and make good on agreements to pay their debts to social housing landlords. Throwing a bond into the mix won't really add much that isn't already being achieved, but it will add a whole lot of new work for whoever has to take, hold and refund all of that money. Then there is the financial imposition it would place upon all public housing tenants - necessarily on low incomes, as a condition of eligibility - rather than just those who do cause damage to their property during a tenancy.

The latest iteration of this idea seems to have taken a different turn. In one of his first media engagements as Social Housing Minister, Brad Hazzard said “[A bond] reinforces the message that if you do something bad to this property that you don’t own, you will lose some money to fix it.” Then, in the Future Directions for Social Housing document released in January this year, it was announced that FACS Housing would:

Introduce public housing rental bonds for all new tenants through an approach that mirrors the private market rent bond scheme, reinforcing tenant responsibility in regard to rent arrears and tenant damage, as well as helping to prepare them for transition to the private rental market. To commence during the second half of 2016, the bonds will be applied to new leases and will be equivalent to four weeks market rent, capped at $1,400. Tenants will be able to pay the bond in installments over two years, which will be administered by the Rental Bond Board.

In shifting away from a cost recovery strategy to one of encouraging tenant responsibility and capacity building, it seems that Government may have decided to push ahead with a public housing bonds scheme after all, even if it comes at a new cost to taxpayers.

There's a strong likelihood that it will come at a cost to public housing tenants, too, even after putting aside the difficulties most tenants living well below the poverty line would face in paying fortnightly instalments for two long years. A quick investigation of how well the Land & Housing Corporation handles "tenant damage" matters reveals a couple of systemic problems they will need to address, if their scheme's objectives are not to be doomed from the start.

The first is that they are notoriously bad at completing ingoing condition reports. As this 2008 article from Robert Mowbray shows, the problem is a long standing one. There are recent examples, too, indicating this problem hasn't yet been addressed. Examples such as the tenant who signed up for a new tenancy late last year and still hasn't received a condition report. Apparently the local FACS staff have said they'd just like to add a few things to it before they hand if over. Then there's the tenant who recently moved from one property to another, whose new condition report notes a "clean, undamaged and working" exhaust fan in the kitchen - except that there isn't one... And what about the time FACS staff referred to a condition report that was compiled many years before the tenant they were trying to recover damages from had even signed a residential tenancy agreement and moved into the property? Before a Tribunal, no less!

But even where ingoing condition reports are compiled, whether poorly or otherwise, they seem to have far less importance placed upon them than an outgoing inspection. According to one Tenants' Advocate, “we constantly see ingoing condition reports prepared by FACS Housing that have little or no detail in them and no photos. Every single item is recorded as clean, undamaged and working. Yet the outgoing report is always extremely detailed with photos and every single item is recorded as not clean, damaged and not working.”

The second issue flows from the first. Without a reliable condition report, tenancy managers are unable to establish what, if anything, the tenant should actually be held liable for. To get around this, it seems a common practice has arisen whereby the entire bill for bringing a property back up to re-lettable standard is passed on to the tenant. Sure, there will be times when this includes some cleaning and repair costs that a tenant is liable for, but it can push a bill that a tenant is only partially liable for into the stratosphere. As one Tenants' Advocate was informed by local FACS workers when questioning such a bill - "this is standard procedure".

The Brown Couch knows of a situation where a "tenant damage" bill exceeding $7,000.00 was more than cut in half when a Tenants' Advocate became involved, questioning a number of costs that were clearly not the tenant's responsibility. These included replacing worn-out kitchen appliances that the tenant had been making do with for some time, and the cost of restoring parts of the property that had been vandalised after the tenant had vacated. In that case, it also included some costs that the tenant agreed they were liable for, and was happy to pay. But that is not always so.

The Land & Housing Corporation also raises debts in situations where they shouldn't, such as against a former tenant who had been escorted from her property after an extreme domestic violence incident. The property had been trashed after she'd left, and FACS staff were well aware of this. They noted on her file that she should not be charged for the damage, but a debt was raised nevertheless. Even after discovering their mistake it took a very long time for the debt to be waived after it had been raised in the system.

In yet another example, a bill of several thousand dollars was reduced during conciliation in the Tribunal, because FACS staff knew they were trying to charge the tenant for things she wasn't responsible for. Then the tenant reminded the FACS' representative that her rent was in advance and she was entitled to a refund. When all was said and done the Land & Housing Corporation actually owed the tenant about $90.00. That's something that should have been picked up well and truly before making a Tribunal application, and it shows the work the Land & Housing Corporation has before it if it wants a rental bond scheme to be seen as anything other than a way of harvesting tenants' money more easily.

You'll forgive us if we seem to be going on about this a bit, but it really can't be stressed enough. Tenants should not be asked to embrace a scheme that is designed to encourage personal responsibility and capacity building unless the system within which it is to operate is responsible, and has the capacity to deliver on its undertakings. When it comes to the Land & Housing Corporation's approach to "tenant damage" and related debt recovery, no such system exists. If we are ever to see such a system, the necessary reform to policy and practice will not come from placing new expectations upon tenants, but on the landlord.

There are many reasons why bonds for public housing tenancies are a bad idea. Even if we ignore them all, the introduction of a bonds scheme would be premature. The public housing landlord needs to get its own house in order first.